Houston Waterbourne Foreign Trade – Imports and Exports

Article Highlights• The third installment of GHPB’s analysis of the trade of the U.S. and analyzes the different types of goods and commodities that either arrive or leave the Port of Houston. • All in all, the value (US$) of Houston’s total waterborne trade has increased, influenced mostly by the energy commodity and its related products, e.g. chemicals, fertilizers, plastic, and rubbers• Imports have fallen slightly in recent years, but the fall has been contracted by an increase in exports.

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IntroductionThis is the third installment of the Port Bureau’s analysis of the waterborne trade of the U.S. and analyzes the different types of goods and commodities that either arrive or leave the Port of Houston aboard ocean-going vessels. Unless otherwise stated, the term “trade” in this analysis refers to waterborne foreign trade and “Port of Houston” refers to all public and private terminals in the Houston port region. First, Houston total trade is briefly compared to U.S. total trade, of which a complete analysis was presented in the November 2015 edition. Then, following the analysis in the previous installment of this series, the analysis of Houston trade provides an overview of the top commodity groups that comprise the total trade of the Houston - the sum of imports and exports - for both value and tonnage. Next, the data set is evaluated from two perspectives: the mode of transportation and the direction of cargo movement. The first perspective organizes the data for total trade based on the mode of transport by separating trade into containerized and non-containerized (e.g., break bulk and bulk) cargos. The second view divides the data for total trade into the two constituent components – imports and exports – and shows the top commodity groups for each.

BackgroundAs a reminder from the previous articles, data is from a database created by the U.S. Census Bureau that is sourced to international trade information captured by the U.S. Customs and Border Protection. Data is presented for both value (U.S. dollars) and weight (tons) for both imports and exports, which are all categorized according to the 99 two-digit codes of the Harmonized Tariff Schedule. To facilitate analysis of like goods and commodities, many of these 99 codes have been combined into 26 distinct yet overarching categories referred to as commodity groups, which is one of the key data sets utilized for this project. Ranking was determined based on the 11-year average of the applicable data set. All analysis will include a historical picture showing the evolution of each commodity group from 2003 through 2014.

Houston Trade Compared to the Total U.S.On average over the 11 year analysis period, the Port of Houston represents about 6% of the value of U.S. imports and about 10% of the value of U.S. exports. The percentage is higher from a tonnage viewpoint: Houston imports around 14% and exports around 12% of all of the U.S. tonnage. Combining imports and exports for total trade, the Port of Houston handles about 9% of U.S. total trade by value and about 11% of the related tonnage. If trade were equally distributed across all of the 187 ports in the database, each port would represent 0.5% of U.S. trade – Houston clearly surpasses that amount.When considering trade by commodity type, in general, Houston’s top four to five commodities represent a slightly larger proportion of Houston’s total trade, both by value and by tonnage, than for the U.S. as a whole. In other words, Houston’s trade is somewhat more concentrated in its key commodity areas than total U.S. trade is. The reader is invited to compare the results by section to the previous article to see the differences between Houston and U.S. trade.

Houston Total Trade -ValueThe value of Houston’s total trade grew from $50 billion in 2003 to $167 billion in 2014. While growing somewhat significantly during the early years of the decade, growth was interrupted during the Great Recession of 2008-2009, and the value of total trade dropped by $40 billion or 28%; the U.S. as a whole also dropped 28% during that time. The value of the Houston’s total trade recovered during the three years after the recession, reaching a zenith of $176 billion in 2012, exceeding its pre-recession level. Since that time, the value of total trade has dipped slightly to $168 billion, where it remained for both 2013 and 2014. Figure 1 displays a chart of the evolution of the Houston total trade by value over the last 11 years. The top five trade components comprise 87% of Houston’s average annual total trade from 2003 to 2014 and are shown by Table 1. The major contributor to Houston’s growth in value of total trade has been the energy commodity group, which rose from $15 billion in 2003 to a peak of $77 billion in 2011 and held steady at $75 billion in 2012. It then declined somewhat significantly at $7 billion a year for both 2013 and 2014, finishing in 2014 at $64 billion. The overall decline is due to the faster rates of decline in the quantity of imported crude oils outstripping the somewhat slower rate of increase in the quantity of exports of refined products. The increase in U.S. oil production has also influenced the increase in Houston’s chemical, fertilizers, plastics, and rubber commodity group, which grew from $11 billion in 2003 to $32 billion in 2014. Exports of organic chemicals increased from $4 billion in 2003 to over $12 billion in 2014, an increase of $8 billion over 11 years.

TonnageHouston recorded 112 million metric tons for total trade by tonnage in 2003. It experienced a nice burst of 10 million metric tons a year from 2003 through 2005. Total trade tonnage reached 135 million metric tons in 2005 and remained quite steady at that value through 2009. Post-Recession, Houston’s total trade tonnage rose to over 153 million metric tons by 2011 before stabilizing at 148 million metric tons from 2012 to 2014. The net difference between 2003 and 2014 was an increase of 36 million metric tons. See Figure 2.From 2003 to 2014, the top five tonnage components comprised 93% of Houston’s average annual total trade tonnage. See Table 2. Houston’s total trade tonnage for the energy and the chemicals, fertilizers, plastics and rubber commodity groups grew moderately between 2003 and 2014.This resulted from increased oil production that lowered the quantity of crude oil imports, raised the quantity of refined products exports, and provided cost-effective feedstock for chemicals.

Houston Waterborne Foreign Trade – Mode of TransportationGoods shipped in containers are generally categorized as finished or semi-finished products with higher value than raw materials often shipped as break bulk and bulk. Houston is the top port in the Gulf of Mexico for waterborne foreign trade for containerized and non-containerized (bulk and break bulk) goods by value. While Houston has traditionally been considered a bulk and break bulk port, the volume and value of containerized cargo has increased in recent years. The energy commodity group has declined both in value and tonnage as a result of lower crude price and import volumes, which has resulted in a decline of bulk cargos. An overview of the tonnage and value of containerized versus bulk/break trade is depicted in Figure 3.

Houston Waterborne Foreign Trade – Container Total Trade -ValueThe value of Houston’s container total trade grew dramatically from $18 billion in 2003 to $60 billion in 2014 – a $42 billion change. Over the 11-year analysis period, the growth in the value of Houston’s container total trade is attributed to the expanding chemical manufacturing activity that increased by $12 billion and growth in machine parts that increased by $10 billion, reflecting about half of the total growth. The top five components comprised about 75% of Houston’s average annual containerized total trade from 2003 to 2014. See Table 3.

TonnageIn 2003, Houston’s container total trade tonnage was 12 million metric tons and rose about 5 million metric tons over the following eight years. Houston’s container tonnage increased to 20 million metric tons for both 2012 and 2013, and then jumped to 25 million metric tons at the end of 2014. During 2014, the container shipment of propane surged by 4 million metric tons, accounting for 80% of the increase. In addition, the container total trade tonnage for the chemicals, fertilizers, plastics, and rubber commodity group doubled from 4 million metric tons in 2003 to over 8 million metric tons in 2014, supporting Houston’s position as a leading petrochemical port. From 2003 to 2014, the top five container tonnage components comprised 77% of Houston’s average annual containerized total trade tonnage. See Table 4.

Houston Waterborne Foreign Trade – Bulk/Break Bulk Total Trade-ValueThe value of Houston’s bulk and break bulk total trade rose from $30 billion in 2003 to $103 billion in 2008 and dropped $32 billion (or 31%) during the Great Recession. It recovered to a new high of $122 billion in both 2011 and 2012, and then dropped $8 billion in both 2013 and 2014 for final level of $107 billion at the end of 2014. The energy commodity group’s two-year loss of $14 billion accounted for 88% of the decline in the value of Houston’s bulk and break bulk total trade, a function of the quantity of crude oil imports declining at a faster rate than the rising of the quantity of refined product exports. The top five components comprised 98% of Houston’s average annual bulk/break bulk total trade from 2003 to 2014, but exhibited a slight decline to 95% in 2014. These commodities are shown by Table 5.

TonnageHouston’s bulk and break bulk total tonnage trade rose from 100 million metric tons in 2003 to over 135 million metric tons in 2011. From this peak, tonnage dropped to 127 million metric tons in 2012 and 2013, then again to the current level of 123 million metric tons in 2014. As with the drop in value, the primary contributor to this drop in tonnage is the energy commodity group where the quantity of crude oil imports declined at a faster rate that the rise of the quantity of refined product exports. The top five bulk and break bulk tonnage components comprised 98% of Houston’s average annual bulk/break bulk total trade tonnage from 2003 to 2014. See Table 6.

Houston Imports -ValueHouston’s imports grew steadily from $27 billion in 2003 to $78 billion in 2008, until the onset of the Great Recession drove imports down by over $30 billion to a low of $48 billion in 2009. Houston’s imports recovered to $83 billion in 2012, dropped $11 billion during 2013 to $75 billion and remained at this level through 2014. The primary driver of Houston’s imports is the energy commodity group where declining crude oil imports dropped in value by about $10 billion over the last 3 years. The top four categories represented 83% of Houston’s total average annual imports. See Table 7.

TonnageThe tonnage associated with the imports portion of Houston’s trade rose from 79 million metric tons in 2003 to a peak of 94 million metric tons in 2006. Over the next 8 years, Houston’s trade tonnage imports cascaded downward in a series of multi-year steps reaching 69 million metric tons at the end of 2014, a beginning-to-end difference of 10 million metric tons. The main component is again the energy commodity group where crude oil imports declined by 16 million metric tons from a peak of about 50 million metric tons in the first 10 years to 34 million metric tons in 2014. The average annual tonnage for Houston’s top four import commodity groups was 77 million metric tons or 95% of Houston’s average annual tonnage imports during the 11-year analysis period. See Table 8.

Houston Exports -ValueHouston’s exports experienced phemomenonal growth from $22 billion in 2003 to over $92 billion in 2014. This growth was quite steep both before and after the Great Recession until temporizing between 2011 and 2014 at a level aound $90 billion each year. The export of refined products grew $30 million over the 11 year period, a 43% increase, contributed significantly to this growth in Houston’s exports. The four top export commodity groups accounted for $52 billion or 82% of Houston’s average annual exports from 2003 to 2014. See Table 9.

TonnageExcept for a slight dip in 2009, Houston’s export tonnage grew each year, from 33 million metric tons in 2003 to 78 million metric tons in 2014, for a total increase of 45 million metric tons. The key component of this growth was refined petroleum products that grew from 15 million metric tons in 2003 to 50 million metric tons in 2014.The four top commodity groups totaled 52 million metric tons or 91% of Houston’s average annual waterborne foreign export tonnage. Details are displayed by Table 10.

ConclusionHouston has a number of unique characteristics that make it an ideal location for commerce:• The port has five refineries with a capacity of 1.3 million barrels daily that equates to 7.5% of total U.S. refining capacity and 25% of Texas refining capacity. (Statistics based on Energy Information Administration and Department of Energy data.) • It’s one of the largest petrochemical manufacturing areas in the world with 120 plants within the Port of Houston area.• A world class gas processing facility located at Mont Belvieu has the capacity to fractionate 1.6 million barrels of gas liquids a day.• Two container terminals handled over 25 million metric tons of containerized cargo in 1.9 million loaded and empty TEUs during 2014. (Data based on Port of Houston Authority trade statistics.) • Bulk/break bulk cargo during 2014 was 123 million metric tons.• Steel imports and exports totaled over 10 million metric tons.• The direct value of Houston’s total waterborne foreign trade in 2014 was $458 million a day and represented 9% of the total trade of the U.S. While oil is the commodity that drives the port, Houston also handles chemicals, machinery, metals, automobiles, and foodstuffs - the Port of Houston can do it all!Ed. Note: The fourth installment of this series will focus on the top ports in the U.S. Read it in the January 2016 Port Bureau News.